Pracharat housing scheme receives phenomenal response from low income earners



BANGKOK: -- The first day of applications for loans for the Pracharat (Civil State) low-cost housing scheme was met with phenomenal response from aspiring first home owners with four billion baht loans being sought yesterday.

Government Housing Bank (GHB) and Government Savings Bank (GSB) reported reported more than 4,300 people applied for loans amounted to about 4 billion baht yesterday.

Each bank has 20 billion baht loans to provide under the government’s sponsored 70 billion baht loan to enable low income earners to have their own houses.

However of the 70 billion baht loans, 40 billion baht will be for GHB and GSB to provide, while the rest 30 billion baht will be provided to private property developers to join the scheme.

GHB vice president Chartchai Sirilak said he expected the 20 billion baht loan arranged for the scheme to be fully applied in two months.

But he said the bank was ready to propose its board to instead the loan amount if demand by the people is still high.

He said although the extension of soft loan under the scheme would cost the bank to lose 300-400 million baht a year in interest rates, it was ready to support the scheme.

GSB president Chartchai Phayuhanavichai also expected the 20 billion baht loan would be fully applied in 2-6 month time.

He said although the lending terms under the scheme would be relaxed, it would not increase the bank’ s non- performing loans.

The scheme gives priority to aspiring first home owners to apply for cheap housing loans for either new or second-hand houses valued at no more than 1.5 million baht.

These applications will be granted low interest rates and the right to apply for a further low interest loan for the purpose of home refurbishment.

Around 4,300 people applied for total loan value of 4.1 billion Baht which is equal to approximately 1 million baht per applicant.

Government Housing Bank branches reported that applicants had queued in front of their doors even before the official opening time.

Kasikorn Bank’s stock analyst Sorapong Chaktirangkul, meanwhile, said the property sector is believed to receive the windfall from the scheme, particularly large property and real estate developer Pruksa Real Estate which has up to 12 billion baht unsold housing units and houses and LPN Development.

Source: http://englishnews.thaipbs.or.th/content/156632


-- Thai PBS 2016-03-24

Loaning is the easy part it is the paying of the loan where the problem will be. Now might be different story if Farangs were given loans too maybe at slightly higher rate. Then it might workout the way it is suppose to.

Bit like the cheap car policy a few years back ? Most couldn't afford the cars and couldn't keep up the payments ???

Doomed !

We know how this will end! Too many past examples.

We know how this will end! Too many past examples.

It will most probably end that same way it's begun...

30 billion baht will be provided to private property developers to join the scheme

The government refuses to recognize the high level of indebtedness in this country. While it might not help the economy the government should be encouraging people to save money instead of borrowing more. I hope the banks have good repossession services !

maybe the govt is well aware and they have a less altruistic agenda

Learning curve=0 I guess the banks will make money in the property repo. The developers get legal kickbacks strait from the government. Is it really for the poor?

Interesting last sentence in the article:

"the property sector is believed to receive the windfall from the scheme, particularly large property and real estate developer Pruksa Real Estate which has up to 12 billion baht unsold housing units and houses and LPN Development."

It seems there are a lot of property developers with financial problems because they are unable to unload their housing stocks into the market. So now the government helps them a hand to unload the overpriced real estate by loaning money to the poorer Thais who cannot real afford these new houses (if they could, they would have bought them already). Recipe for disaster.